Wholesale power and gas contracts experienced mixed movements this week, as most baseload power contracts and near-term (up to and including summer 19) gas contracts followed EU ETS carbon and API 2 coal prices lower, whilst recovering Brent crude oil prices pushed seasonal gas contracts up. Most baseload power contracts fell, with day-ahead, winter 20 and summer 21 the exceptions. Day-ahead power started the week at a one-month low of £57.0/MWh; however, forecasts of lower wind generation supported prices towards the end of the week, rising 0.5% to £62.4/MWh. Most seasonal baseload power contracts fell, down 0.7% on average. Near-term gas contracts up to and including summer 19 fell. Day-ahead gas was down 2.1% to 59.3p/th, as forecasts of milder temperatures until 18 January, and firm LNG send-out so far this year, have pressured prices. Day-ahead gas dropped to a five-month low of 57.0p/th on 10 January. Seasonal gas contracts rose 1.5% on average, however, summer 21 gas dropped 0.4% to 53.5p/th. Brent crude oil prices recovered from the previous week, rising 8.5% to average $59.8/bl as OPEC’s 1.2mn bpd production cut began. API 2 coal prices dropped 2.8% to average $82.2/t, pressured by a milder start to the year, full coal stocks and increasing competition from gas in European markets. EU ETS carbon prices dropped 9.7% to average €22.4/t. Weak demand at auctions led within-day carbon prices to drop to $21.4/t on 10 January, a one-month low.
Day-ahead power rose 0.5% week-on-week to £62.4/MWh amid forecasts of lower wind generation.
February and March 19 power contracts dropped 3.8% and 4.3% to £61.5/MWh and £58.6/MWh respectively.
Annual April 19 power dropped 2.1% to £57.9/MWh.
The contract is 6.4% below the same time last month when it was £61.8/MWh and 28.6% higher than its value last year (£45.0/MWh).
Forward curve comparison
Annual April Contract
Day-ahead peak power rose 2.3% to £69.8/MWh. This was £7.4/MWh above its baseload counterpart.
Month-ahead peak power went down 4.6% to end the week at £67.7/MWh, £6.2/MWh above its baseload counterpart.
Week-on-week, annual April 19 peak power fell 2.1% to £63.1/MWh. The contract was £5.2/MWh above its baseload power counterpart.
The contract was 6.1% below its price last month (£67.3/MWh) and 25.7% higher than its value last year (£50.2/MWh).
Forward curve comparison
Annual April contract
Seasonal power prices
Seasonal baseload power contracts
Seasonal baseload power curve
Seasonal contracts between summer 19 and summer 20 dropped, with seasonal contracts down 0.7% on average.
Summer 19 power was down 2.5% to £54.6/MWh, having dropped to a two-month low of £54.4/MWh on 10 January.
All seasonal peak power contracts went down this week, the second consecutive weekly decline.
Seasonal peak contracts fell 1.3% on average.
The summer 19 contract saw the largest change, down 2.7% to £58.3/MWh.
Commodity price movements
Oil and Coal
Brent crude oil prices recovered from the previous week, rising 8.5% to average $59.8/bl.
Oil prices have been supported by OPEC’s 1.2mn bpd production cut, with analysis from S&P Global Platts that the group’s output dropped 630,000bpd in December to a six-month low of 32.4mn bpd.
Russia, which has committed to cut 230,000bpd, has dropped production to 11.38mn bpd in 2019, down from a record high of 11.45mn bpd December.
API 2 coal prices dropped for the third consecutive week, down 2.8% to average $82.2/t.
Coal prices have been pressured by a milder start to the year, full coal stocks and increasing competition from gas in European markets.
EU ETS carbon prices dropped 9.7% to average €22.4/t.
Weak demand at auctions led within-day carbon prices to drop to $21.4/t on 10 January, a one-month low.
A total of 7.5mn EUAs were available for auction this week, rising to 11.9mn next week as Poland’s first auction of the year takes place on Wednesday.
The European Commission announced that German carbon auctions are expected to return in February and will include unauctioned EUAs from the postponed auctions since 14 November 2018.
The Brexit vote in the House of Commons on 15 January may continue to weigh on market sentiment.
Wholesale price snapshot
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